Merc Audit Problems Threaten Proposed Contracts, Cftc Says

January 24, 1985|By Laurie Cohen.

THE COMMODITY Futures Trading Commission said Wednesday that alleged deficiencies in the Chicago Mercantile Exchange`s financial audit program might jeopardize approval of new contracts proposed by the exchange.

The criticism came in a follow-up report by the agency`s staff to a 1983 review of the Merc`s rule-enforcement program. The recent study, completed in November, found the exchange failed to report to the CFTC several instances in which members violated commission regulations and took as long as two years to complete audits of brokerage firms.

The Merc ``must immediately revise its program`` for reporting and for timeliness of completing audits ``to help insure that serious problems will be identified and reported in the future,`` the staff report said. It warned that ``continued failure`` to comply with reporting requirements might cause the staff to urge commissioners not to approve the Merc`s contract proposals.

AN AGENCY official said the alleged deficiencies were viewed as ``quite serious.`` She added, however, that ``we have no reason to believe that the Merc won`t be forthcoming and reply`` to the staff`s concerns, thus forestalling any impact on new contracts approvals.

``We have agreed with all their important recommendations,`` an exchange official said.